CHIQUITA BRANDS INTERNATIONAL INC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-1550

CHIQUITA BRANDS INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)


New Jersey		04-1923360
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

250 East Fifth Street

Cincinnati, Ohio 45202

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (513) 784-8000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x. No ¨.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x. No ¨.

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes x. No ¨.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of July 31, 2004, there were 40,845,646 shares of Common Stock outstanding.

CHIQUITA BRANDS INTERNATIONAL, INC.

TABLE OF CONTENTS


		Page
PART I - Financial Information

Item 1 - Financial Statements

Consolidated Statement of Income for the quarters and six months ended June 30, 2004 and 2003		3

Consolidated Balance Sheet as of June 30, 2004, December 31, 2003 and June 30, 2003		4

Consolidated Statement of Cash Flow for the six months ended June 30, 2004 and 2003		5

Notes to Consolidated Financial Statements		6

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3 - Quantitative and Qualitative Disclosures About Market Risk		24

Item 4 - Controls and Procedures		24

PART II - Other Information

Item 4 - Submission of Matters to a Vote of Security Holders		24

Item 6 - Exhibits and Reports on Form 8-K		25

Signature		26

Part I - Financial Information

Item 1 - Financial Statements

CHIQUITA BRANDS INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

(In thousands, except per share amounts)


	Quarter Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Net sales	$	848,386		$	829,173		$	1,641,554		$	1,300,502

Operating expenses
Cost of sales		713,722			718,304			1,391,441			1,099,811
Selling, general and administrative		78,184			61,345			151,003			106,315
Depreciation		10,672			9,258			21,507			16,433
Loss on sale of Colombian division		9,289			—			9,289			—
Gain on sale of Armuelles division		—			(20,658	)		—			(20,658	)

		811,867			768,249			1,573,240			1,201,901

Operating income		36,519			60,924			68,314			98,601
Interest income		577			645			1,363			1,037
Interest expense		(9,858	)		(11,556	)		(20,027	)		(21,121	)

Income from continuing operations before income taxes		27,238			50,013			49,650			78,517
Income tax benefit (expense)		3,000			(1,500	)		500			(3,500	)

Income from continuing operations		30,238			48,513			50,150			75,017
Discontinued operations
Loss from operations		—			(1,862	)		—			(5,390	)
Gain on disposal of discontinued operations		—			9,904			—			11,809

Net income	$	30,238		$	56,555		$	50,150		$	81,436

Basic earnings per common share:
- Continuing operations	$	0.74		$	1.21		$	1.23		$	1.88
- Discontinued operations		—			0.20			—			0.16

- Net income	$	0.74		$	1.41		$	1.23		$	2.04

Diluted earnings per common share:
- Continuing operations	$	0.73		$	1.21		$	1.18		$	1.88
- Discontinued operations		—			0.20			—			0.16

- Net income	$	0.73		$	1.41		$	1.18		$	2.04

See Notes to Consolidated Financial Statements.

CHIQUITA BRANDS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEET (Unaudited)

(In thousands, except share amounts)


	June 30, 2004		December 31, 2003		June 30, 2003
ASSETS
Current assets
Cash and equivalents	$	198,066	$	134,296	$	173,588
Trade receivables (less allowances of $8,520, $13,066, and $13,997)		353,593		292,522		321,619
Other receivables, net		85,746		84,289		91,304
Inventories		164,220		193,968		181,001
Prepaid expenses		18,243		17,528		16,765
Other current assets		30,319		15,347		12,024

Total current assets		850,187		737,950		796,301
Property, plant and equipment, net		403,147		440,978		407,758
Investments and other assets, net		130,853		93,377		128,243
Trademark		387,585		387,585		387,585
Goodwill		42,199		43,219		39,948
Assets of discontinued operations		—		3,610		17,807

Total assets	$	1,813,971	$	1,706,719	$	1,777,642

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes and loans payable	$	8,658	$	9,195	$	21,324
Long-term debt of subsidiaries due within one year		26,659		38,875		115,742
Accounts payable		329,308		264,373		289,020
Accrued liabilities		112,291		144,230		122,297

Total current liabilities		476,916		456,673		548,383
Long-term debt of parent company		250,000		250,000		250,000
Long-term debt of subsidiaries		86,754		96,490		94,481
Accrued pension and other employee benefits		73,440		81,899		82,118
Other liabilities		84,784		62,414		63,115
Liabilities of discontinued operations		—		1,897		9,489

Total liabilities		971,894		949,373		1,047,586

Shareholders’ equity
Common stock, $.01 par value (40,828,654, 40,037,281 and 39,920,942 shares outstanding, respectively)		408		400		399
Capital surplus		648,797		630,868		626,056
Retained earnings		162,551		112,401		94,631
Accumulated other comprehensive income		30,321		13,677		8,970

Total shareholders’ equity		842,077		757,346		730,056

Total liabilities and shareholders’ equity	$	1,813,971	$	1,706,719	$	1,777,642

See Notes to Consolidated Financial Statements.

CHIQUITA BRANDS INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)

(In thousands)


	Six Months Ended June 30,
	2004			2003
Cash provided (used) by:
Operations
Income from continuing operations	$	50,150		$	75,017
Depreciation		21,507			16,433
Loss on sale of Colombian division		3,589			—
Gain on sale of Armuelles division		—			(20,658	)
Severance payments for Armuelles division		—			(16,713	)
Changes in current assets and liabilities and other		(13,169	)		(6,543	)

Cash flow from operations		62,077			47,536

Investing
Capital expenditures		(17,364	)		(27,246	)
Proceeds from sale of:
Colombian division		28,500			—
Armuelles division		571			14,507
Other property, plant and equipment		4,551			666
Other		(2,362	)		1,359

Cash flow from investing		13,896			(10,714	)

Financing
Issuances of long-term debt		13,688			79,042
Repayments of long-term debt		(36,924	)		(127,311	)
CBL credit facility amendment and other fees		(537	)		(3,869	)
Increase (decrease) in notes and loans payable		(537	)		12,835
Proceeds from exercise of stock options/warrants		10,768			—

Cash flow from financing		(13,542	)		(39,303	)

Discontinued operations		1,339

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents